All about range plans
Range plans are the merchandiser’s secret weapon. And I’m here to spill their secrets. Now that I’ve made it sound really dramatic, let’s get started.
What is a range plan?
Your range plan lets you plan when to launch, update and stop selling products in your range. You might think of it as the lifecycle of each product.
What does a range plan show you?
Your range plan shows all the details of all your products, all together in one place. It shows your categories, sub-categories, attributes, prices, costs and margins. And if you’re not sure what I mean by all that, a good place to start is my free resource all about Understanding Product Hierarchies and Attributes.
It also shows when you plan to launch, sell, update, and end each product. It gives you your all-important totals for quantities, selling and cost prices, and profit margins.
In short, it’s your Retail Bible.
When should you use a range plan?
Range plans are always useful, but they really come into their own when you’re planning your product range for a specific time, a year, a season or an event (e.g. Christmas).
Why is range planning important?
Range planning keeps your customers happy, because it ensures you always have what they want, when they want it. And we all like happy customers.
Your range plan also helps you manage your costs and grow your profits, so you can keep a close eye on what you’re spending, your margins and quantities.
And your range plan does that all-important thing that matters so much when we run our own small businesses. It saves you time by helping you work out what to do and when to do it.
How to range plan…
1 · Let’s start with sales targets and categories!
Your sales target is the number of products you are planning to sell. Think of it like a pie that can be cut into slices, with each slice representing a product category. The size of each slice will depend on how many sales that category will contribute to your overall sales target.
But how big should each slice be? Well, if you’ve been using the Flourish Sales Tracker, you’ll be able to see how many sales you have taken in each of your categories so far. Looking at the percentage mix of each category can help you decide how to slice your pie. That’s not so hard after all.
Here’s a handy example…
Let’s imagine you make cake toppers and your sales target for this year is £10,000.
Your products fall into three categories; wedding, birthday and christening. Looking at your sales analysis, you can see that your sales are split into 50% wedding, 40% birthday, and 10% christening.
That means the slices of your sales target ‘pie’ will look like this:
• Wedding = £10,000 x 50% = £5,000
• Birthday = £10,000 x 40% = £4,000
• Christening = £10,000 x 10% = £1,000Within those three categories you have your product hierarchy of sub-categories and products, which you can see at a glance with the help of the Flourish Range Plan.
2 · Introducing the pie’s filling: products and quantities.
Once you’ve sliced up the pie, it’s time to look at the pie’s filling (a.k.a. your products).
For the perfect filling (and happy customers), you need the right number of products, in the right quantity. It’s a balancing act, so let’s look at a couple of elements to consider.
Where you sell is important:
If you sell online, your customer sees an image of your product. Each image (so each product) takes up the same amount of space, whether you have 1 product or 10,000. You can have a bigger number (width) of products in smaller quantities.
If you sell in-store, your customer can see and touch your product while they decide whether to buy. You’ll need enough products to fill the retail space you’re paying to display them in. And you’ll need to understand that retail space, buying the right number (depth) of products to entice your customer to buy.
Quantities and sales demand matter, too:
Have too much of a product and you’ll have to mark it down if you want it to sell. That means you'll lose profit.
Have too little of a product and the scales tip the other way, and your customer ends up disappointed. You won't generate the sales and profit you need (and your customers may become loyal customers of your competitors instead).
Having the right quantity of each product means you meet your sales demand, have happy customers and maximise your profit. You can find out more about sales demand here.
3 · Time for the shopping list!
By now, you’ve worked out:
The number of products you’ll have in each category.
The quantity of each product that you'll make or buy, based on your sales demand.
The selling price of each product.
Product x Quantity x Selling Price = Total Sales Value (if you sell it all at full price)
The Flourish Range Plan adds up your categories for you so that you can see:
If each category is the right size
If it needs to be bigger or smaller
What the total range looks like
Whether you have more sales opportunity or a risk
Once you’re happy, you’ve successfully written your shopping list! And that means you’ve got a detailed view of what products you’re going to need.
Here’s a handy example…
Back to those cake toppers! Remember, your sales target for the year is £10,000, and you’ve sliced that target into product categories based on the mix of sales you’ve had in the past. The ‘wedding’ category was 50% of the mix (£5,000).
Within ‘wedding’ you have three sub-categories; ‘Mr & Mrs’ (50%), ‘Just Married’ (30%), and ‘Bride and Groom Initials’ (20%).
That means your £5,000 slice of pie will now be cut into:
• ‘Mr & Mrs’ = £5,000 x 50% = £2,500
• ‘Just Married’ = £5,000 x 30% = £1,500
• Bride & Groom Initials = £5,000 x 20% = £1000Next, let’s focus in on ‘Mr & Mrs’ and work out how many products you need in this sub-category. You can see from your sales and analysis that you sold 140 units over the last year, making £2,100 in sales. This means that your Average Selling Price (ASP) is £15 (sales ÷ units sold, or £2,100 ÷ 140).
Your sales target for the ‘Mr & Mrs’ sub-category is £2,500. If you’re going to make this you’ll need to sell 167 units (sales target divided by the average selling price, or £2,500 ÷ £15). If you do the sum yourself you’ll see we’ve rounded up slightly to get to 167 in this example.
So, you’ll have to sell 167 units at the price of £15 each to achieve your sales target of £2,500. But how many products do you need to have?
Over the last year, you've been selling four different types of ‘Mr & Mrs’ cake toppers, and you sold 140 units. Your Average Sales Units (ASU) is the number of units sold, divided by the number of products. That means for your sales of cake toppers last year, 140 units sold ÷ 4 products = 35 ASU.
You know you need to sell 167 units to hit your sales target this year. So how many products do you need to have? Easy!
Total Sales Units ÷ Average Sales Units = Number of Products
That’s 167 ÷ 35 = 5 (we’ve rounded it up again!)So you can see you’ll need 5 products. Your sales analysis and current trends show that:
• Your GOLD ‘Mr & Mrs’ cake topper sells double your average sales units, and you’ve sold out a couple of times.
• Your SILVER ‘Mr & Mrs’ cake topper sells the average amount.
• Your PINK ‘Mr & Mrs’ cake topper hasn't been selling very well (you only sold one in the last couple of months, so you decide to stop selling it). As rose gold is on-trend, you’ll add that into your range instead and see how it sells.
• Your GLITTER ‘Mr & Mrs’ cake topper has been selling more and more each month, so you should sell more units in total. You charge a bit more for those at £18.With all that in mind, you plan your range:
• GOLD: 75 units @ £15 = £1,125
• SILVER: 35 units @ £15 = £525
• ROSE GOLD: 17 units @ £15 = £255
• GLITTER: 40 units @ £18 = £720Total units = 167
Total products = 4 (you didn’t need 5 products in the end because the GOLD ‘Mr & Mrs’ cake topper sells double what the others sell)
Total sales potential = £2,625Remember what we said earlier? Your Average Sales Units (ASU) is the number of units sold, divided by the number of products. That means for your cake toppers this year, you’re planning to sell 167 units ÷ 4 products = 42 ASU
As the Average Selling Price is higher than before (thanks to your plan to sell more of the slightly more expensive £18 GLITTER ‘Mr & Mrs’ cake toppers), you have more potential sales in the Category. You get your Average Selling Price by dividing your Total Sales by Total Units so in this case, it’ll be £2,625 ÷ 167 = £15.72
Hoorah! You've written your Shopping List!
4 · Introducing product lifecycles…
If you can give your customer what they want, when they want it, they’ll be more likely to buy from you. It seems pretty straightforward when you put it like that!
By planning when to launch, update and stop selling products in your range, you’re deciding the lifecycle of each product. Your Range Plan lets you see your range through your customers' eyes, ensuring you have everything they want to see and buy. You’ll know that you have enough products and stock, at any point in time, to achieve your sales and profits.
Here’s a handy example…
Imagine you’re selling dresses.
Your ‘Going Out Dress’ category is made up of 15 products across these sub-categories:
• 6 x Bodycon Dresses
• 4 x Skater Dresses
• 3 x Wrap Dresses
• 2 x A-Line DressesLet’s focus in on the 6 x Bodycon Dresses:
• 1 x Black @ £35
• 1 x Black @ £50
• 1 x Red @ £35
• 1 x Green @ £35
• 1 x Floral @ £40
• 1 x Print @ £40The two black dresses offer customers two different styles at different price points. The £35 Black dress sells continuously, so you’ll run that one all year. The £50 Black Dress is sleeveless and embellished, so although it’s black, it offers something different to the £35 black dress. When you get to Christmas, you’ll replace the £50 dress with a “winter version”. You should plan when the £50 black dress should sell out before Christmas to avoid having to mark it down. You also offer the same shape as the £35 Black dress in red and in green. You’ll update the colours every couple of months to keep them exciting and to encourage your customers to buy the new versions. The Floral and Print dresses are based on the trends and seasons. You update these every six weeks to offer something new.
By planning when each of these products will launch, update and be sold out, you are optimising your range, making sure you have a great offer for your customers and enough product and stock to achieve your sales target.
The Flourish Range Plan helps you to plan each product, so you can go forth and delight those customers!
5 · And finally… marketing!
You’ve created your shopping list and planned each product’s lifecycle. Now it’s time to add the finishing touches with your marketing. This is made up of all the different elements that go into promoting and selling your product or service in a thoughtful and timely way.
You can use the Flourish Range Plan to see snapshots in time that let you know when your products launch or update. That means you also know when to shout about them to your customers!
You can schedule these dates in your Flourish Retail Marketing Calendar, making the most of your time and maximising your sales. And that’s a winning combination for you AND for your customers.
